COMMISSION STAFF WORKING DOCUMENT Country Report Austria 2015 {COM(2015) 85 final} This document is a European Commission staff working document . It does not constitute the official position of the Commission, nor does it prejudge any such position.
Date: 2015-02-26
Institutions: European Commission
Subjects: Austria, bank, economic growth, higher education, investment, loss, population ageing, social-security benefit, structural adjustment, working conditions













EUR-Lex - 52015SC0039 - EN











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52015SC0039

COMMISSION STAFF WORKING DOCUMENT Country Report Austria 2015  {COM(2015) 85 final}     This document is a European Commission staff working document . It does not constitute the official position of the Commission, nor does it prejudge any such position. /* SWD/2015/0039 final  */









Executive summary  1
1.       Scene
setter: economic situation and outlook  3
2.       Structural
issues 7
2.1.   Enhancing
financial sector resilience  9
2.2.   Taxation and
fiscal framework  13
2.3.   Pension,
health and long-term care systems 15
2.4.   Reinforcing
long term labour supply  19
2.5.   Towards a
more effective and inclusive education system   23
2.6.   Promoting a
competitive and innovative business environment 25
A.      Overview
Table  28
B.       Standard
tables 33
LIST OF Tables
1.1.     Key
economic, financial and social indicators - Austria   5
1.2.     Macroeconomic
Imbalances Procedure indicators 6
3.4.1.  Share of
population with tertiary education  21
B.1.     Macroeconomic
indicators 33
B.4.     Labour
market and social indicators 36
B.5.     Product
market performance and policy indicators 38
B.6.     Green
Growth  39
LIST OF Graphs
2.1.1.  Capitalisation
and asset quality of Austrian banks 9
2.1.2.  Outstanding
bank loans to nonbanks in CHF, Q3 2014  9
2.2.1.  Tax wedge
Austria 2013  13
2.2.2.  Implicit tax
rate on labour 2012  14
2.3.1.  Hospital beds 15
2.4.1.  Employment
rate of selected age, nationality and gender groups 19
2.4.2.  Active
population growth by citizenship and age  20
2.4.3.  Child care
ratios by age group and province 2013/2014  21
2.5.1.  Resources and
performance of secondary education  23
2.6.1.  Product market
regulation in professional services 26
2.6.2.  Business
dynamics in market services access countries 2012: entry, exit, churn  26
2.6.3.  Mark-ups
estimate in professional services 27
The Austrian economy has stagnated since
the second quarter of 2012. Export growth declined
significantly and domestic demand, in particular investment, has been weak despite
a robust labour market and favourable financing conditions. GDP growth is
expected to resume and improve in 2015-16, assuming that international trade picks
up and investment responds more vigorously to supportive financing conditions,
also in light of recent quantitative easing by the European Central Bank.
Employment growth has remained positive despite weakening growth dynamics, a
trend that is expected to continue in the medium term. The quality of jobs
created may give cause for concern, as the role of part-time and low-paid jobs
in strengthening employment has been considerable in recent years. Also,
despite positive employment growth, unemployment may be slow to decline to
pre-crisis levels, as the labour supply is likely to keep increasing, not least
through immigration. Despite a solid, but moderate external surplus, Austria
has suffered a pronounced loss in world trade market shares. Medium-term trends
in foreign demand are expected to present opportunities to Austrian exporters.
Still, the last 2-3 years of weak investment may pose downside risks, limiting
the extent to which exports can benefit from such a recovery. Fiscal
consolidation has slowed down in 2014 due to the cost borne by the government
for the financial support of Hypo Alpe Adria Group, which translated into
higher deficit and debt ratio.
This Country
Report assesses Austria's economy against the background of the Commission's
Annual Growth Survey which recommends three main pillars for the EU's economic
and social policy in 2015: investment, structural reforms, and fiscal
responsibility. In line with the Investment Plan for Europe, it also explores
ways to maximise the impact of public resources and unlock private investment. The main observations and findings of the analysis are:
·        
Despite tangible progress in the restructuring
of nationalised banks, the financial sector remains subject to risks, which
could have adverse implications for public finances and financial stability.
·        
The Austrian taxation system and the fiscal
framework present weaknesses arising from a high tax wedge, low tax autonomy
for subnational governments and a complex system of fiscal relations between
the different layers of government.
·        
A number of reforms are being implemented in the
fields of pensions and healthcare. However their ability to improve the
long-term sustainability of these systems is uncertain.
·        
The main labour market indicators are much more
favourable than those of most other EU countries, but labour market
participation and educations achievements are low for particular groups of the
Austrian population.
·       Entry and conduct restrictions for service providers and
insufficient competition do not favour a dynamic business environment,
investment and an efficient resource allocation. Mismatched skills of university
graduates compared to labour market demand are also a drag on business
innovation.
Overall this Country Report finds that
Austria has made some progress in addressing the country-specific
recommendations issued by the Council in 2014. Significant
headway was made in restructuring the nationalized Hypo Alpe Adria Group in the
second half of 2014. Over the past year, Austria has continued to implement the
reforms already adopted in the pension and in the healthcare sector. Political
consultations on a tax reform to reduce the tax wedge as recommended to Austria
in 2014 were stepped up, although the financing alternatives of this reform
still appear to be controversial at this stage. Some progress has been made to
improve the employability of migrants and older workers. There has been limited
progress in improving women's labour market prospects and in tackling the
challenges faced by the education system. Some country-specific recommendations
have remained largely unaddressed. Specifically, no efforts have been made to
streamline fiscal relations or to reconsider restrictions and regulations in
order to boost competition in services.
The Country Report also reveals the following
policy challenges:
·       The financial system requires close monitoring as latent
vulnerabilities are resurfacing. The asset quality
of Austrian banks' central, eastern and south-eastern European subsidiaries has
remained under pressure. Notwithstanding several supervisory measures adopted in
the last couple of years, the stock of foreign currency (mostly Swiss franc)
loans warrants close monitoring, especially following the Swiss National Bank's
withdrawal of the cap on the rate of the Swiss franc. Against the backdrop of
recent geopolitical developments, the exposure of Austrian banks to Ukraine and
Russia needs close monitoring.
·       The budgetary impact of population ageing may pose a challenge to
long-term fiscal sustainability. The general
government debt has increased significantly during the crisis and reached high
level. In addition, population ageing poses risks which, without further
structural action in the pension and health care sectors, threaten long-term
sustainability of public finances.
·       The current organisational relations between levels of government
are complex and inefficient. The institutional
set-up of public administration, with overlapping responsibilities and mismatch
between funding and spending responsibilities, remains a drag on reform design
and implementation.
·       Ensuring long-term labour supply, given demographic changes remains
a challenge. The low labour market participation of
older workers, women and migrants risks eroding Austria’s growth potential and
living standards.
·       Austria's education system still features disadvantaged youth
underachievement and insufficient market relevance of qualifications. The strong link between education performance and socio-economic
background continues to give cause for concern. The dropout rate in higher
education is still high and a gap remains between graduates' qualifications and
market demand.
·       More competition would benefit enterprise and innovation. Market entry and conduct restrictions for providers of especially,
but not only, professional services, are still largely in place. This may
result in insufficient competition and costly and inadequate business and
consumer services.
·       Maintaining a healthy investment rate is essential to growth
prospects. The Austrian economy's growth momentum
has stalled and investment growth has been muted in recent years. Traditional
investment may not be sufficient to avoid a further fall in world market shares
going forward. Innovation and start-ups have a significant role to play in reinvigorating
investment and boosting the competitiveness of the economy. Enabling factors
such as competitive and responsive business services and diversified financing
sources would be key to promoting entrepreneurial dynamism.
The Austrian economy has stagnated since
the second quarter of 2012. The dynamics of
economic activity have been weak and unsteady across all sectors. Export growth
slowed down significantly compared with the situation before and early after
the 2009 recession amid moderating foreign demand. Domestic demand has been
characterised by weak consumption and investment growth, despite a robust
labour market and favourable financing conditions. GDP growth is expected to
resume and improve in 2015-16, conditional on a pick-up in international trade
and a more vigorous response of investment to supportive financing conditions,
which will be supported by the ECB's recent quantitative easing.
Energy prices have helped lower
inflation, but core inflation is stable. Consumer
price inflation turned at 1.5% in 2014, reflecting a disinflationary impact
from energy prices. The momentum in the remaining components, in particular
hospitality and recreation services, has continued thanks to unabated demand in
these sectors, keeping core inflation at 1.9%. These trends are expected to
remain in place over the medium term, especially as demand rises. Energy prices
are expected to bottom out in 2015 and regain some ground in 2016.
The labour market has performed
strongly, but challenges lie ahead. Employment
growth has remained positive despite weakening growth dynamics, a trend that is
expected to continue in the medium term. Unemployment may, however, be slow to
decline to pre-crisis levels, as the labour supply is likely to keep increasing
in the short-to-medium run on account of immigration and the closing of avenues
for early retirement. The quality of job growth may be a concern, as the role
of part-time and low-paid jobs in strengthening employment has been
considerable in recent years.
While the economy is free of major
imbalances, maintaining competitiveness and long term growth prospects requires
constant attention and consistent policy efforts.
Despite a solid, but moderate external surplus, Austria has suffered a
pronounced loss in world trade market shares. Medium term trends in foreign
demand are expected to present opportunities to Austrian exporters, which have
broadly maintained productivity growth and benefit from their strong
integration in international production chains. Still, the last 2-3 years of weak
investment may pose downside risks, limiting the extent to which exports can benefit
from such a recovery.
Between 2010 and 2013, Austria reduced
the deficit to below the 3% threshold relying on a
mix of discretionary saving and tax measures. Tax revenue also benefitted from
the adoption of several one-off measures and from dynamic personal income tax
revenue given the robust rise in employment, particularly between 2011 and 2013.
At the same time, public finances suffered from public financial support to a
number of banks that experienced losses and capital shortfalls arising from the
financial crisis. 
The cost of the financial support to
Hypo Alpe Adria Group together with the deterioration of the economic growth
rate led to a widening of the general government deficit in 2014, which is expected to reach 2.9% in 2014, according to the
Commission Winter Forecast. Beside the cost of public financial sector support,
the deterioration of the 2014 deficit seems also reflect the low rate of growth
rate of the Austrian economy in 2014. 
In 2015, the headline deficit is
expected to fall to 2% of GDP, given that support to the Hypo Alpe Adria Group is
a one-off cost. The general government deficit will
continue to suffer from the impact of weak cyclical conditions. 
The debt ratio is relatively high and
has increased significantly in recent years. The
government debt, after rising by roughly 5.5 percentage points to 86.8% of GDP
in 2014 (64.8% of GDP in 2007) owing to the transfer of Hypo Alpe Adria assets
under the general government account, is expected to fall to 86.4% of GDP in
2015.
The budgetary impact of population
ageing may pose a challenge to long-term fiscal sustainability in the area of
pensions and health policies. Based on the
long-term sustainability gap indicator (S2 indicator) ([1]), Austria was identified as a medium-risk country. Austria’s
pension system is characterised by an effective retirement age that remains
considerably below the statutory retirement age. This is mainly due to the use
of early retirement and invalidity pensions. The lower pensionable age and
early retirement of women, beyond translating into high cost for the pension
system in the medium-term, results in insufficient pension entitlements, a
large gender pension gap, and an increased risk of poverty for women in old
age. Total healthcare and long-term care cost for Austria are elevated and are
projected to further increase in the medium-term.
As detailed further in the report, various
challenges, if unaddressed, may constrain Austria’s growth potential in the
future:
·       Despite significant progress as regards to the banks’ restructuring,
close monitoring of the banking system is needed, notably related to possible
deterioration of assets quality due to high exposure to Russia, Ukraine, and
the Swiss franc.
·       Low labour market participation of older workers, women and people
with migrant background may act as a drag on long-term labour supply.
·       Education underachievement remains significant among disadvantaged
youth and there are still gaps between graduates’ qualifications and market
demand. 
·       Restrictive regulation of professional services limits competition
and may be affecting overall business dynamics, investment and innovation.
Box 1: Economic
surveillance process
The
Commission’s Annual Growth Survey, adopted in November 2014, started the 2015 European Semester,
proposing that the EU pursue an integrated approach to economic policy built around
three main pillars: boosting investment, accelerating structural reforms and
pursuing responsible growth-friendly fiscal consolidation. The Annual Growth
Survey also presented the process of streamlining the European Semester to
increase the effectiveness of economic policy coordination at the EU level
through greater accountability and by encouraging greater ownership by all
actors.
This
Country Report includes an assessment of progress towards the implementation of
the 2014 Country-Specific Recommendations adopted by the Council in July 2014.
The Country-Specific Recommendations for Austria concerned public finances and taxation, pensions, health and
long-term care, labour market participation, education, competition in services
and the banking sector.
 Table 1.1:       Key economic, financial and social indicators - Austria 
 Source: Eurostat, ECB, AMECO 
 Table 1.2:       Macroeconomic Imbalances Procedure indicators 
 Flags: e: estimated.                                                                                                                                                                                                      "Note: Figures highlighted are the ones falling outside the threshold established by EC Alert Mechanism Report. For REER and ULC, the first threshold concerns Euro Area Member States. (1) Figures in italic are according to the old standards (ESA95/BPM5). (2) Export market shares data: the total world export is based on the 5th edition of the Balance of Payments Manual (BPM5). (3) Unemployment rate i=Eurostat back calculation to include Population Census 2011 results. (4) House Price indicator: source National Central Bank.   Source: European Commission"                                                                                                                                          
The banking sector has remained
resilient, but continues to face a challenging domestic and international
environment. Domestic lending activity has been
rather depressed in recent years given the limited corporate appetite for
investment. Foreign exposures have increasingly had a negative impact on
profitability, as asset quality in several countries in central, eastern and
south-eastern Europe (CESEE) has remained under strain. Previously reliable
sources of revenue (for instance, from Russia) for several banks with
international operations are likely to become less so as a result of mounting
geopolitical risks, combined with deteriorating economic activity in several
host countries. Furthermore, latent vulnerability concerns have come to the fore
in the light of recent policy withdrawal of the cap on the rate of the Swiss
franc by the Swiss National Bank.
 Graph 2.1.1:   Capitalisation and asset quality of Austrian banks 
 Source: Austrian National Bank 
Banking sector capitalisation has
continued to improve in 2014, whereas the asset quality of the central eastern
and south-eastern European subsidiaries of Austrian banks has remained under
pressure. Capital adequacy at system level reached
15.6% at the end of June 2014 compared with 15.4% by end of 2013, while the
core Tier 1 capital (at consolidated level) increased marginally to 11.8% in
mid-2014 compared to 11.6% at the end of 2013([2]). Asset quality has further deteriorated in several CESEE countries
where Austrian banks operate, but overall the CESEE subsidiaries'
non-performing loans declined to 14.2% by the end of June 2014, compared with
15.3% by the end of June 2013. Non-performing loans at consolidated level stood
at 8.9% in mid-June 2014 compared with 8.6% at the end of 2013, whereas the
unconsolidated non-performing loan stood at 4.5%.
The profitability of Austrian banks
remained under pressure in 2014. The lower
profitability of the CESEE subsidiaries and the low interest rate environment
in Austria coupled with the limited credit activity is weighing on banking
sector profitability. Whereas the Austrian market has continued to remain
competitive, the high cost-to-income ratio due to still rigid cost structures and
the increase in loan-loss provisions have continued to negatively impact
profitability.
 Graph 2.1.2:   Outstanding bank loans to nonbanks in CHF, Q3 2014 
 Source: European Central Bank 
Swiss franc lending to households
continues to warrant close oversight following the recent policy action of the
Swiss National Bank. Swiss franc (CHF) denominated
loans (which account for roughly 90% of foreign currency loans) were extremely
popular in Austria before the outbreak of the financial crisis due to the lower
interest rates, low volatility of the CHF and the demand for CHF denominated
products from Austrians with income in CHF. Austria has the largest stock of
foreign currency lending in CHF (Graph 2.1.2). Roughly 70% of the total foreign
currency loans granted by Austrian banks to households have been bullet loans,
most of them linked to repayment vehicles which are sensitive to financial
market developments. However, foreign exchange loans to households and
nonfinancial corporations, in particular CHF loans, have decreased
significantly since autumn 2008 (i.e. by roughly 43%), reflecting inter alia
initiatives of the Austrian banking supervisors on risk management and new
lending in foreign currency, and the 2011 European Systemic Risk Board
recommendations aimed at curbing foreign exchange lending to unhedged
borrowers. At the end of September 2014, outstanding foreign currency loans of
Austrian banks to domestic non-banks amounted to roughly EUR 37.4 billion
(11.6% of total loans), compared to EUR 55.5 billion (18% of loans) in 2008.
The Swiss franc appreciation is expected to have a contained impact on the
asset quality([3]) of Austrian
banks as regards their operations on the Austrian market, due to largely
solvent borrowers and adequate collateralisation. However, considering that
Austrian banks with international operations have exported the business model
based on CHF lending to the CESEE countries, where borrowers tend to be
unhedged and their debt servicing capacity is highly heterogeneous, further
pressures on asset quality are expected from these exposures.
Five out of the six largest Austrian
credit institutions passed the ECB comprehensive assessment.([4]) With the exception of Österreichische
Volksbanken (OEVAG), all Austrian banks passed the ECB comprehensive
assessment. All Austrian banks met the Common Equity Tier 1 ratio of 8% after
the Asset Quality Review. However, OEVAG has failed the stress test both in the
baseline and adverse scenario, revealing a capital shortfall of EUR 865
million. The latter has been addressed in the new restructuring measures
announced by OEVAG, which include inter alia the winding-down of a part of its
operations. The Asset Quality Review had a higher impact on Austrian banks as
compared with the euro area average, mainly owing to the higher risk profiles
of the Austrian banks' CESEE portfolios. In the stress test, the Austrian banks
were more strongly affected than their euro area peers by the cost of funding
shock, credit risk costs and the Basel III phase-in effects.
Against the backdrop of the recent
geopolitical developments, the exposure of Austrian banks to Ukraine and Russia
needs close monitoring. The international exposure
of Austrian banks has been concentrated in the CESEE region with total exposure
to the region amounting to EUR 198 billion at the end of June 2014. Austrian
banks have significant exposure to both Ukraine and Russia, larger than all
their European peers. Raiffeisen International, the Austrian bank most active
in eastern Europe, had an exposure of EUR 14.7 billion to Russia and
EUR 2.9 billion to Ukraine at the end of September 2014. The relations between
Ukraine and Russia have put a drag on the asset quality of these subsidiaries,
but also on their earning capacity. Erste Bank Group is not present in Russia,
but has residual exposures of EUR 435 million in Ukraine, after having sold its
Ukrainian subsidiary in 2013. Therefore, a further deterioration in the
economic situation in Russia and Ukraine could further negatively impact
Austrian banks.
Restructuring of nationalised banks 
In line with the recommendations of the
2014 CSR, the authorities have made significant progress on restructuring of
nationalised/partially nationalised banks.
Österreichische Volksbanken AG (OEVAG) has proceeded with the implementation of
the restructuring plan approved by the Commission, but its low profitability
and deteriorating asset quality has complicated the restructuring process. The
Maltese subsidiary of OEVAG was sold in September 2014. Furthermore, a sale and
purchase agreement for OEVAG's Romanian subsidiary was signed in December 2014.
Before the publication of the results of the ECB comprehensive assessment,
OEVAG announced further restructuring and reorganisation measures, subject to
state aid and regulatory approval. These include splitting OEVAG and
transforming 44 regional Volksbanken and seven special institutions into nine
strong regional banks by merging small and medium-sized banks. The original
OEVAG would be left with non-core assets, which would be wound down. In the
first half of 2015, OEVAG intends to give up its banking licence to become a
non-regulated vehicle and leave the joint liability scheme. 
The restructuring of Hypo Alpe Adria
Group made consistently progress in 2014. The
Austrian Government decided in March 2014 to set up an asset management company
(AMC) for Hypo Alpe Adria Group in the second half of 2014 with the aim to take
over the impaired assets of the Hypo Alpe Adria Group from both its operations
in Austria and South Eastern Europe. The law on setting-up an AMC for the Hypo
Alpe Adria Group (i.e. "Hypo-Sondergesetz") was approved by
Parliament in July 2014. The law allows inter alia the full write down
of all subordinated debt maturing on or before 30 June 2019, notwithstanding
the existence of a deficiency guarantee issued by the State of Carinthia, which
the law declares null and void. The decision to bail-in subordinated debt backed
by state guarantee has cast doubts about the value of such guarantees and
triggered rating actions against the Hypo Alpe Adria Group and other Austrian
banks. In line with the provisions of the Hypo-Sondergesetz, the operations of the
Hypo Alpe Adria Group are split into a "bad bank" (i.e. the AMC) and
a "good bank" consisting of Hypo Alpe Adria's subsidiaries in South
Eastern Europe, to be subsequently sold. 
The AMC for the impaired legacy assets
of Hypo Alpe Adria Bank International was formally established at the beginning
of November 2014. The banking licence of Hypo Alpe
Adria was terminated at the end of October 2014. Heta Asset Resolution, the AMC
resulting from the split of Hypo Alpe Adria, has an asset perimeter of roughly
EUR 18 billion, does no longer take up deposits and does not hold any
participation in other financial institutions. The assets transferred to Heta
Asset Resolution are currently subject to a due diligence process, which may
trigger further impairments and pressure on the capital of this vehicle. In
case the due diligence reveals higher-than-expected impairments, options
discarded so far (for instance, a potential bankruptcy) may gain renewed
momentum. The AMC, which is currently owned by the Austrian state, appears to have
attracted the interest of foreign investors, although no concrete details of
potential offers are known so far. The South Eastern Europe network of Hypo
Alpe Adria Bank International was sold in December 2014 to a consortium
composed of an American investment fund and the European Bank for Reconstruction
and Development. 
KA Finanz, the bad bank of
Kommunalkredit  continued to downsize its assets in 2014 through portfolio
divestment measures. KA Finanz, which operates in a
winding down mode, holds the securities and credit default swaps portfolio
remaining after the 2009 demerger of the former Kommunalkredit which was split
up into a "good bank" and a "bad bank" following its
nationalisation in November 2008. Benefiting from more favourable market
conditions, KA Finanz has further reduced its total assets, which went down to
EUR 7.7 billion at the end of June 2014 compared with EUR 8.1 billion at the
end of 2013. The operational income has not been sufficient to cover the net
expenses incurred through the portfolio run-down measures and the pressures on
funding costs. KA Finanz therefore recorded a loss at the end of June 2014.
Despite challenges associated with the introduction of Basel III, KA Finanz had
a total capital adequacy ratio of 19.9% and a CET 1 ratio of 13.6% at the end
of June 2014. It received capital support of EUR 350 million in 2013
to help it meet the more stringent capital requirements under Basel III, but no
additional support was needed in 2014. A sales process has been started for
roughly 33% of the assets of Kommunalkredit (i.e. the "good" bank
resulting from the splitting of Kommunalkredit old in 2009). The remaining
assets will be put into wind-down.
Summing up, despite tangible progress in
the restructuring of nationalised banks, the financial sector remains subject
to risks, which could have adverse implications for public finances and
financial stability. Several domestic and foreign
vulnerabilities seem to have worsened rather than faded away requiring a
consistent and proactive policy response.
The Austrian taxation system and the fiscal
framework present weaknesses arising from a high tax wedge, low tax autonomy
for subnational government and a complex system of fiscal relations between the
different layers of government.
Taxation
Different indicators rank Austria
significantly above the EU average on labour taxation. The combination of personal income tax, social security
contribution rate and payroll taxes (in particular contributions to the family
burden equalisation fund and municipal taxes) lead to a high tax burden on
labour in Austria as indicated by the share of labour taxes in percentage of
GDP, the large tax wedge and the high implicit tax rate on labour([5]). 
Reducing the tax wedge is likely to
boost labour market participation. Employment
performance is on average good in Austria, with an employment rate of 75.7% in
the first three quarters of 2014. However, reducing the tax burden on labour,
in particular for low-income earners, is likely to boost labour market
participation and would also make the Austrian labour market more resilient to
downside-risks. Such a measure could also contribute to reducing in-work
poverty in the country. Austria is one of the countries with the biggest
low-wage trap([6])
for second earners and the inactivity trap is relatively high at low income
levels. This is likely to be one of the reasons why the employment rate of
low-skilled people was 19.6 percentage points lower than the general employment
rate in 2013 (EU-average: 16.3 percentage points). 
There is potential for shifting the
taxation of labour to other sources of taxation less detrimental to growth. The 2014 country-specific recommendations refer in particular to
exploiting the revenue potential of the immovable property tax. Immovable
property tax revenue, amounting to 0.6% of GDP in Austria, is the fifth lowest
in the EU far below the EU 28 average of 2.3%. Other sources of taxation such
as the inheritance tax, gift tax and environmental taxes, could also contribute
to the tax shift. In particular, environmental taxes, despite showing a
revenue/GDP ratio in line with the EU average, could encourage progress towards
achieving the Europe 2020 targets for reducing greenhouse gas, which Austria is
currently expected to miss by a gap of 7 percentage points. 
 Graph 2.2.1:   Tax wedge Austria 2013 
 Single person 100% average wage Source: OECD, European Commission, Tax-Benefit Database 
No progress has been made so far on
reducing the tax burden on labour, but the Government is currently working on a
proposal for a major tax reform. In 2014, it set up
an expert group to put forward proposals for a tax reform, which resulted in a
comprehensive report submitted in December 2014. There seems to be consensus on
reducing the first bracket rate of personal income tax, currently set at a high
entry rate (36%), and to provide a tax relief of about EUR 5 billion (1.5% of
GDP). Discussions are being held on how to finance this significant tax
reduction. The ExpertInnenkommission presented its report to a political
steering committee. This Committee will assess the proposals in the first
quarter of 2015 and prepare a political decision by the Ministerrat no later
than 18 March 2015. Given the high public debt level, it is crucial to ensure
that the reform is fully financed and does not impact public finances
negatively. Initial proposals could be challenging in that regard, as some
appear to rely on doubtful sources of financing. 
 Graph 2.2.2:   Implicit tax rate on labour 2012 
 Source: European Commission 
Fiscal Framework
The current organisational relations
between different levels of government remain complex and cause efficiency
losses in crucial sectors of public administration.
Austria remains one of the countries with the lowest share of subnational own
taxes([7])
in percentage of GDP, in particular regarding the tax-raising powers of subnational
governments. Despite this low level of tax autonomy, subnational levels of
government have several spending and administrative responsibilities, which in
many cases are shared between levels of government and are financed mainly by
intergovernmental transfers and shared taxes. The high level of complexity and the
misalignment between revenue and spending responsibilities are not conducive to
comprehensive policy reforms. It leads to efficiency losses in crucial public
administration functions, including healthcare, education systems and spending
on social transfers. Furthermore, as a result of complex interactions between
national and subnational policy strategies key policy areas (e.g. innovation
and research policy) suffer from coordination costs and efficiency losses. This
may prevent the exploitation of cross-regional synergies. 
The reform of the Austrian Stability
Pact, which entered into force in 2012, has strengthened Austria's fiscal
framework. The reform introduced a set of fiscal
rules and has also translated the Council Directive 2011/85/EU on budgetary
frameworks in the Member States and the Fiscal Compact into national
legislation. The new Austrian Stability Pact has also strengthened fiscal rules
at subnational level. 
However, the current institutional
set-up is likely to continue to complicate the achievement of these targets,
especially when fiscal consolidation needs will be less pressing. Targets at subnational level have indeed been missed very
frequently between 2000 and 2009 also due to the mismatch between the tax
raising power and spending responsibilities at subnational level. The full achievement
of fiscal targets in 2012-2013 was in part due to higher positive revenue
developments at the central level translated in higher shared tax revenue also
for subnational governments, while fiscal consolidation efforts led to
effective expenditure control at subnational level. However, fiscal targets
have proved pro-cyclical in the past given that the enforcement of subnational
fiscal targets is lower in time of favourable cyclical conditions. Thus, fiscal
targets are unlikely to be met if the institutional set-up will not be reformed
to ensure a more efficient cost-financing structure. 
No comprehensive measures have been
adopted to address the long-standing issue of streamlining relations between
levels of government. An administration and
deregulation commission (Aufgabenreform- und Deregulierungskommission)
was established in June 2014, in order to suggest different options for
decreasing administrative burden and to increase efficiency of administrations
thereby achieving savings also at subnational level. Other actions taken in
2014 relate to the reduction of the number of hierarchical layers in
educational administration. However, these measures appear to have limited
scope to enhance the organisation and division of powers between layers of
government.
The 2014 country-specific
recommendations identified the long-term sustainability of pensions, healthcare
and long-term care as a major medium-term challenge
to Austrian public finances, given projected trends in age-related
expenditure. The Commission, in cooperation with the Member States, is
currently preparing updated data on the budgetary impact on pension and
healthcare spending, which will be published in the first half of 2015.
Preliminary results indicate that the better demographic outlook and improved
macroeconomic assumptions underlying the revised projections may lead to some
moderation of long-term sustainability risk. Nevertheless, the main trend of an
increasing old-age dependency ratio remains intact, although it may be less
pronounced than in earlier projections. Current projections seem to confirm expectations
of a steady increase in health care and long-term care expenditure in the
long-term. 
The effective retirement age remains
considerably below the statutory retirement age, while the statutory retirement
age of women is well below that of man. The low effective
retirement age is largely due to the use of early retirement and invalidity
pensions, which negatively affects long-term sustainability of the pension
system. Women's low statutory retirement age, besides putting pressure on
fiscal sustainability in the medium-term, also results in low pension
entitlements, partially contributing to a large gender pension gap which has
widened from 35% in 2008 to 42% in 2012([8]). Against this background, Austria was advised in 2014 to monitor
the recent reforms in restricting early retirement. In addition, further
structural measures aimed at bringing forward the harmonisation of the
statutory retirement age for man and women, increasing the effective retirement
age and aligning the retirement age to changes in life expectancy were deemed
necessary to improve the long term sustainability of the pension system. 
Austria's health care system relies on
hospital-based care, signalling potential cost efficiency gains from shifting
care towards outpatient services. The number of
acute care beds per capita is among the highest in Europe and is declining at a
lower rate than in the EU([9]) on average.
The complex governance structure with many responsibilities divided among the
different layers of government is not conducive to reorganising the system notably
by adjusting current cost-sharing among administrations to encourage better use
of more effective and cost-effective services.
 Graph 2.3.1:   Hospital beds 
 (1) Curative care hospital beds per 100 thousand residents Source: European Commission 
Different elements suggest that the
current design of the long-term care system consisting of cash benefits and
publicly organised long-term care services can be improved. Cash benefits provision is not means-tested, while the magnitude of
the benefits varies according to an evaluation of the care requirements of the
person in need of assistance. In addition, the quality and the availability of public
formal care services differ across the Länder. These factors may
potentially explain the large reliance on informal care, mostly provided by
dependents' relatives.
Austria continued to implement a number
of measures in the pension sector related to reforms approved in recent years. The government made changes to the pension system to encourage
people to remain in employment longer. The main measures entered into force on
1 January 2014. They restricted access to early retirement and invalidity
schemes and barred people under 50 from temporary invalidity pensions. The government
also raised the annual increment for late retirement from 4.2% to 5.1% which
should provide an incentive for later retirement. Additional reforms to raise
the effective retirement age were taken in 2013, such as increasing the penalty
per year of early retirement and the years of pensionable service needed to
qualify for this scheme. With these reforms, the government sought to raise the
effective retirement age from 58.4 years to 60 years between 2012 and 2018. No
measures have been taken to link statutory retirement age to life expectancy,
or to harmonise the statutory pensionable age of women and men at an earlier
date: the process is scheduled to run from 2024 to 2033.
The pension reforms adopted so far may
not translate into significant expenditure savings.
Steps taken by the government in 2013 and in 2014 to restrict conditions for
early retirement, and, particularly, for invalidity pensions have already
resulted in fewer applications. Since the adoption of these reforms, the average
retirement age has risen from 58.4 to 59.7 years, according to preliminary
government estimates([10]). However,
although it is too early to assess the actual budgetary effect of these
reforms, their savings potential is unclear, in particular compared with ex-ante
government estimates. Excluding the size of the savings arising from moderate
increase in existing pensions in 2013 and 2014, the 2012 Stability Programme
estimated the overall amount of savings expected from the implementation of the
different pension reforms at slightly above EUR 4 billion up to 2016 (of which
EUR 520 million from 2013, additional 267 million from 2014, further 420
million from 2015 and additional 430 million from 2016). While all recent
budget documents have confirmed the amount of savings in 2013 and 2014, the
latest Draft Budgetary Plan reports only EUR 60 million savings expected in
2015 from the rise in the effective retirement age. The reasons for this
apparent revision in the estimates are unclear, especially as it does not seem
consistent with the good progress reported on the increase in the effective
retirement age, raising questions about the reliability of the ex-ante estimate
of these reforms' savings potential. The first monitoring report presented in
April 2014 does not address this issue. Moreover, despite the government’s
announced plans to introduce a binding monitoring mechanism, which would
trigger an adjustment to policies should there be a deviation from the path
towards the target, this was not launched as scheduled in July 2014 and has
been postponed to an unspecified date.
Healthcare reform is on track. The Austrian health system reform plan (2013-2016) is based on
stabilising healthcare spending as a share of GDP as of 2016. Between 2013 and
2016, the reform establishes expenditure savings targets which the government
has been able to achieve in 2013. This cost containment strategy is supported
by the introduction of a tailored monitoring mechanism, setting concrete
operational targets, to improve the organisation of the system. A further key
component of the current reform plan is the full roll-out of the Electronic
Health Record system, a process meriting close follow-up at national level. 
However there are doubts as to whether this
reform can bring about decisive action to reorganise the healthcare and
long-term care systems in a cost-effective and sustainable manner. The lack of ambition of the stated reform principles([11]), which is in some cases reflected in the operational targets,
might limit the extent to which the reform can improve the sustainability of
the system, also beyond the current 2016 time horizon of the reform. Weak
targets may not translate into  decisive actions to strengthen and rationalise
primary care by controlling more effectively the use of specialist and hospital
care; improving the cost-efficiency within hospitals; ensuring that care is
provided in the most clinically appropriate and cost-effective way; and using
more primary care rather than hospital-based care([12]). In this respect, the targeted percentage of patients of 1% for
whom outpatient multidisciplinary primary care settings should be available by
end of 2016 does not appear  ambitious([13]). Another case concerns the in-patient hospital consolidation
targets (overall discharge rates, number of bed days per resident and length of
stay), which seem to merely extend time trends already observed, both in
Austria and internationally. In addition, looking beyond the 2016 time horizon,
important enablers to reduce the focus of the system on acute inpatient care
such as an overhaul of the long-term allocation of resources between the
regional authorities and insurance funds, or a clear consolidation of the
current high availability of hospital acute care beds, are not clearly addressed
in current reform measures. 
Austria has taken some steps towards
improving the financing and provision of long-term care services. Steps include the extension of the Long-Term Care Fund up to 2018,
as well as efforts to streamline the administration of cash benefits. A
positive feature of the reform is its stronger focus on health rehabilitation,
preventive care and independent living. However, it remains a challenge to
effectively meet the increasing demand for these services without putting
further pressure on the long-term sustainability of the system.
Summing up the analysis leads to the
conclusion that overall, Austria has made some progress in improving the
long-term sustainability of the pensions system. However, the potential of
the measures adopted so far to achieve significant savings remains highly
uncertain. The reform of healthcare and long term care services is
progressing although doubts persists on whether decisive actions will be
undertaken to address a number of structural weaknesses undermining the
cost-effectiveness of these systems.
Austria’s labour market performs very well,
despite a recent increase in the unemployment rate.
Although the labour market situation deteriorated somewhat as the country's
economic recovery lost pace, unemployment affects only about 5% of the active
population and 9% of young people, while 75.7% of the working-age population
(aged 20-64 years) was in employment in 2014. The country’s main labour market
parameters are much more favourable than those of most other EU countries.
However, Austria's main challenge remains
to address long-term labour supply in view of demographic changes. The 1% trend employment-growth recorded over more than a decade([14]) may not be sustained in the long run unless further progress is
made to ‘activate’ sections of the working-age population that have so far
remained underutilised or outside employment, notably older workers, women and
people with migrant background.
 Graph 2.4.1:   Employment rate of selected age, nationality and gender groups 
 Source: European Commission 
Extending working lives
Although the employment rate of older
workers has increased recently, it remains low.
While the employment rate for men aged 55-64 is not far below the EU average,
the employment rate for female older workers is considerably lower, even taking
the lower statutory pensionable age into account([15]). Moreover, the employment rate for workers aged 60-64 is only 23%,
10.4 percentage points below the EU average. In addition, early exit pathways
(see section on pensions) contributed to an increase in the employment and
unemployment of elderly workers. While the increase of unemployment is so far
limited in absolute numbers, it signals the need for policy action([16]). The latest available data indicate that at least one third of the
retired would have liked to stay longer on the labour market, which is 16 percentage
points above the EU 28 average([17]). Apart from the options for leaving the labour market early,
continuing barriers to longer working lives are: the lack of age-friendly
working environments, health related issues, high employment costs, inappropriate
qualifications and dependent/ partner care responsibilities (especially for
older women).
 Graph 2.4.2:   Active population growth by citizenship and age 
 (1) nat=national; for=foreign Source: European Commission Calculations 
The ageing of the labour force cannot be
fully offset by immigration. Recent immigration
flows have helped maintain the growth of the active population and replenish
the prime-age cohorts. However, they have only slowed down rather than reversed
the ageing of the national labour force. Thus, immigration is not a substitute
for working environments that can accommodate ageing and are compatible with
family responsibility – not even in the short term, let alone in the long run.
In recent years, older workers became a
central target group of active labour market policy. The 2013-2018 government programme sets specific employment targets
for older workers([18]). Efforts
aimed at increasing employability, helping people to return to work after long
periods of sick leave, providing training and opportunities for qualifications
in new fields of work, and providing age-friendly working environments have been
stepped up considerably. Such efforts support the goal of longer working lives
and help promote participation in the labour market for people with
disabilities([19]). In 2014,
an agreement was reached on an additional labour market package for older
employees, which included wage subsidies, health promotion programmes and
enhanced retraining to update skills. Moreover, there are plans to introduce a
system rewarding later retirement.
Women's labour market participation 
Women's labour market potential remains
under-utilised, partly because women are more often involved in caring for
dependents. While the female employment rate of
70.8% in 2013 is above the EU28 average, it is far less favourable in full-time
equivalents (56.2% in 2013)([20]), as a high
proportion of women work in part-time employment (45.9% in 2013, as compared
with 31.6% for the EU28 average)([21]). The limited availability of childcare and long-term care services
restricts full-time employment opportunities. Together, these factors
contribute to a persistent gender pay gap that is one of the highest in the EU
(23.4% in 2012) and a high gender earnings gap.
The provision of early childcare
education and training is increasing, but major shortages and coordination
issues still need to be resolved. The childcare
ratio([22]) for the 0-2-year-olds
rose substantially between 2007/8 (11.8%) and 2013/14 (23.0%), but it is still
below the Barcelona target of 33%. With a childcare ratio of 90.8% for the 3-5-year-olds
in 2013/2014, Austria has already met the Barcelona target for this age group,
but the services provided are not fully compatible with full-time employment of
the parents. Financing of increased provision of all-day school places and
long-term care services has been ensured since 2011/12. An agreement on
increasing child care support was reached in 2014. There are plans to bring in
further increases in the run-up to 2018. However, there is no coherent strategy
addressing regional differences in availability of childcare and the alignment
of service hours and parents' working hours. Overall, despite some progress,
the provision of childcare and long-term care places compatible with full-time
employment remains inadequate.
 Graph 2.4.3:   Child care ratios by age group and province 2013/2014 
 Source: Statistics Austria 
Labour market participation of immigrants
People with a migrant background make up
an increasing share of the Austrian population, but their labour market
potential remains underutilised. The number of
people with a migrant background([23]) rose from 1.4 million in 2008 to 1.6 million in 2013. Yet, they
continue to face serious disadvantages on the labour market - in the
application process and in salary levels, barriers due to sometimes complex
legal requirements – with particularly difficult challenges for third country
citizens([24]). The
employment rate of people with a non-EU nationality was 60.7% in 2013, 16.1 percentage
points below that of Austrian nationals. Even if in employment, highly
qualified recent immigrants often work in low skilled occupations. In 2011, the
over-qualification rate of people from non-EU-28 countries was 41% in Austria,
above the EU-27 average of 37%. On the other hand, the share of low-qualified
non-EU nationals is also relatively high (44% non-EU nationals as compared with
15% Austrian nationals in 2013)([25]); this is often linked with the fact that socio-economic background
has a major impact on education outcomes. A sub-group of particular concern
comprises the 15-24-year-olds born outside the EU-28, whose employment and
unemployment rates are much worse than other groups([26]).
Immigration has helped boost and
rejuvenate the labour force in recent years and has diversified the skill
structure. Despite some heterogeneity, recent
immigration flows have helped maintain the growth of the active population and
replenish the prime-age cohorts and have contributed positively to the skills
pool (Table 3.4.1).
 Table 3.4.1:     Share of population with tertiary education 
 Source: European Commission 
The 2013 government programme announced
that a comprehensive welcome culture([27]) and an overall strategy to improve migrants’ access to the labour
market would be developed. Work on both is under way. Some measures accompanying the labour market integration of people
with migrant background are already in place (e.g. mentoring programmes,
diversity management). To improve the process by which migrants can obtain official
recognition of their qualifications, service centers have been set up at
regional level. Discussions have started on a legislative proposal for a
comprehensive Recognition Act (Anerkennungsgesetz). It will be important
to closely monitor the progress of these reforms in order to assess whether
further measures might be necessary.
Austria's education system is still
characterised by low achievement of disadvantaged youth and insufficient market
relevance of qualifications. A large proportion of
young people, particularly those with a migrant background, lack adequate basic
skills and there is a strong link between educational performance and
socio-economic background. At the same time the higher education sector is
confronting strategic and financial challenges.
 Graph 2.5.1:   Resources and performance of secondary education 
 Average achievement in Mathematics, Reading and Science Source: OECD PISA 2012, European Commission calculations 
Educational Inequalities 
While average educational outcomes have
improved, there remains an achievement gap of pupils with a low socio-economic status
and young people with a migrant background.
Educational outcomes in terms of basic skills attainment improved in PISA 2012,
and the share of low-achievers remains low, even though the performance is less
impressive when compared to the elevated spending on education (Graph 2.5.1). Furthermore, performance in reading
is somewhat below the EU average([28]). Poorer performance appears to be influenced by the socio-economic
background. OECD regression analysis notably shows that the improvement in
education outcomes associated with a better economic, social and cultural
status (ESCS) is one of the highest in the EU([29]). On the other hand the observed difference between the outcome of
the highest and lowest quartile of the ESCS indicator is in the range of the EU
average([30]). Also,
young migrants, including the children of migrants, who constitute a large and
growing share of the pupils, score less well([31])([32]).
Foreign-born students are three times more likely (20.3%) than native-born
(5.6%) to leave school early([33]). Not enough
attention is given to prevention of early school leaving at an early stage, and
beyond individual initiatives, a nationwide strategic approach to high-quality early
childhood education and care is still outstanding.
During 2014, Austria continued to
implement measures in early childhood education and care and compulsory
education aiming to improve educational outcomes.
Recently, additional public funding has been provided for early childhood
education and care (ECEC) and for language training for this age group. But
some of the measures announced have yet to be implemented, such as the national
quality framework for ECEC, the introduction of an additional compulsory year
in ECEC, and a new transitional phase between early-childhood education and
primary school. The government also announced that by 2018/19, a total of EUR
800 million will be invested in expanding of all-day school places at schools
that stay open all day and measures to improve the quality of the activities
they provide, which do not meet demand at the moment. An evaluation of the new
secondary school system is expected in mid-2015, including information on the
extent to which it has mitigated the traditionally strong impact of
socio-economic background on educational outcomes. In this context, the key
question will be whether this new type of school provides substantially
different education outcomes in comparison with the previous “Hauptschule”.
Higher education and labour market needs
Pressure on higher education continues. The skill forecast contained in the Education and Training Monitor
2014([34]) expects an
increase of 20% in Austrian jobs requiring high level qualification, compared
to an EU average increase of 12.4% in this group, thereby indicating growing
needs from the higher education sector. In addition, while Austria’s tertiary
attainment rate (ISCED levels 5 and 6) has been growing in recent years, 35% of
students in Austria pursuing a university degree do not complete their studies
as compared to an EU average of 31%([35]). There seems to be growing mismatch between graduates'
qualifications and demand. For example, demand is rising in particular for high
level qualifications, particularly in ICT, engineering, management and health([36]), yet the percentage of graduates in mathematics, science and technology
fell from a peak of 32.2% in 2006 to 25.6 % in 2012([37]). However, despite growing demand for higher education, most jobs will
continue to require medium qualifications. Due to the specific role of
vocational education and training (VET) in Austrian education, a large proportion
of Austria’s higher-skilled labour force is traditionally recruited from among
graduates of VET colleges which award ISCED 4a level qualifications, which will
also mitigate the pressure on higher education.
Austria is implementing with some delay
the measures in its higher education plan, that focus
on cooperation processes, infrastructure developments, a new scheme for financing
universities (capacity-based financing) and a new target system for research,
teaching, students and knowledge transfer([38]). Basic funding is secured until 2018, including a more rapid
extension of universities of applied sciences, whose programmes and teaching
are traditionally closer to labour market needs. But due to lack of additional
funding the implementation of reforms has been delayed. In addition, the new
induction and orientation stage at the start of studies suffers from a lack of
clarity and patchy implementation across the country([39]). The introduction of the new capacity-based university funding
system has been postponed and it is not clear when it will be implemented.
The Austrian economy continues to
benefit from macroeconomic stability but the growth performance has been
weakening in recent years. After a vigorous
recovery in 2010-2011, exports growth slowed down significantly. While Austria’s
external surplus remains solid, Austrian exporters have been losing global market
shares, failing to take full advantage of partner economies’ import demand that
is still growing, although slowing down. Along with slowing exports, investment
has essentially stagnated since 2012. Companies are struggling to accommodate
labour cost pressures as stable employment and slowing output have raised unit
labour costs. Thus, the potential for job creation may be close to exhaustion,
unless companies improve their capacity to adapt to and benefit from changing
demand patterns, i.e. to innovate. Increasingly evident reluctance to invest – despite
generally comfortable corporate liquidity and favourable financing conditions –
gives no ground for optimism in this regard.
The high level of public research and
development funding does not lead to corresponding innovation outcome. Austria ranks fifth in the EU 28 in terms of R&D spending as a
percentage of GDP, and the share of the government sector in financing research
and development is clearly above the EU average. However, the relatively high
level of public R&D investment does not translate into corresponding
innovation outputs and related economic effects, partly because of the
relatively low level of cooperation between publicly funded research and
business. There is scope for increasing the private sector’s participation in
R&D, for stepping up knowledge transfer and efficiency in the supporting
innovation. Public spending on R&D co-financed by private companies
accounted for only 0.041% of Austria’s GDP in 2011, compared with an EU average
of 0.051%. While the intensity of R&D undertaken by businesses is above the
EU average, the growth of innovative firms in their start-up phase is below the
EU average (fast-growing firms in 2012 represented only about 6% of employment
in the business economy, compared with an EU average of about 9%).
Austria is
addressing the underperformance of its research and innovation system in a
national research, technological development and innovation strategy adopted in
2011 (‘Der Weg zum Innovation Leader’). In 2014, Austria presented an
overview of its smart specialisation strategy as part of the ex-ante
conditionality, necessary to benefit from co-financing from the European
structural and investment funds between the 2014 and 2020. The strategy is
based on a small number of priorities. It provides information on the policy
mix, explaining in particular how measures are tailored to the needs of small
and medium-sized enterprises, and encourages private investment in R&D. A monitoring
system (including the necessary coordination between regional and federal
levels) is to be set up in order to assess indicators and how stakeholders are
to be involved. To be deemed successful in boosting innovation performance, the
smart specialisation strategy needs above all to promote investment by private
business in research and innovation technology as well as in
knowledge-intensive sectors and technology transfer.
Although particularly important to innovative
firms, the markets for small-scale equity finance (notably venture capital) and
those mobilising retail investors, such as crowdfunding, are still
underdeveloped by comparison with other Member States. Availability of finance remains satisfactory overall. There exists
a comparatively high volume of enterprises’ internal funds and there are no quantitative constraints
on bank lending. On the other hand, while interest
rates remain low, the non-interest costs of bank financing and collateral
requirements have both increased, which particularly affects risky start-ups
and new firms without a credit history. Facilitating a wider range of sources
of finance would help firms strengthen their equity base, avoid looming future
bottlenecks and enable SMEs to invest and contribute to growth and job creation
once the economic recovery picks up speed. However, such actions lost momentum
in 2014, and announced reforms (such as a new legal framework for crowdfunding)
due in 2014 have not materialised, and are still at a very early preparatory
stage.
Austria fully recognises the importance
of sustainable use of resources for competitive business, but further effort is
needed. It has amended the Climate Protection Act
and the Environmental Law Adjustment Act and introduced a wide range of new
policies and measures to further reduce greenhouse emissions, promote
deployment of renewables and meet its commitment to reducing GHG emissions in
sectors not covered by the Emissions Trading System (ETS) by 16% between 2005
and 2020. Additional efforts would also be needed to reach the long-term
resource productivity target stated in the Austrian Resource Efficiency Action
Plan approved in 2012 (improving productivity by 50% by 2020 compared with
2008). Active regional cooperation and appropriate regulatory incentives remain
critical for the development and operation of the electricity and gas networks.
The high-tension 380-kV ring in Austria is yet to be completed and cross-border
capacities at Austria’s borders with Italy, Slovenia, Switzerland and Germany
require improvement. The development of gas networks must also be closely
coordinated with neighbouring countries. For these projects, there is still a
need to provide incentives to transmission system operators so as to encourage
investment, and to further streamline the process for granting permits. There
are indicators pointing to some degree of underinvestment in the energy sector,
especially in the period prior to the crisis([40]).
Legal form, shareholding and tariff
requirements are still in place for several professions, creating regulatory
barriers to market access and preventing professionals or professional
companies from other Member States from setting up a business in Austria. Product market regulation indicators in services sectors, even if
subject to some limitations([41]), indicate that
there is still ample room for improving the regulatory framework, especially in
professional services (Graph 2.6.1.). Differences in regulatory requirements
between Länder continue to complicate the provision of services and the mobility of
services providers. Fixed tariffs prevent service providers from competing on the basis of price and
quality. Austria has started reviewing existing rules on access to professions
and the performance of professional activities, to assess whether they are
proportionate and justified by general interest. It has not taken any measures on
the basis of this review.
 Graph 2.6.1:   Product market regulation in professional services 
 A higher PMR index value indicates more restrictive regulation Source: OECD Product Market Regulation Indicators 
 Graph 2.6.2:   Business dynamics in market services 2012: entry, exit, churn 
 Source: European Commission calculations 
Business dynamics in market services,
including professional services, are weak, possibly affecting price competition
and allocative efficiency. Business churn, the sum
of the birth and death rate of firms, is relatively low (13.4%) compared with
the EU average (19.1%), indicating relatively low business dynamics (Graph 2.6.2.).
The significance of more intense business dynamics is that they result in more
intense competition, which, at least from a static perspective, is expected to
drive prices down and reduce mark-ups. The relatively high estimated mark-ups
in Austrian professional services could therefore partly reflect less intense
business dynamics (Graph 2.6.3.). Although shortage of data makes it difficult
to establish a causal link between a country's reform efforts and its
performance, recent estimates suggest that the potential impact of regulatory reforms
in professional services is substantial: between 2008 and 2011 a one point
reduction in the professional services regulation could have increased the
churn rate in the sector by 1.75 percentage points, leading to a substantial improvement
in the sector's capacity to allocate resources more efficiently and to a 5.3 percentage
points fall in sectorial profit rates([42]).
 Graph 2.6.3:   Mark-ups estimate in professional services 
 Source: European Commission calculations 
The provision of cost effective
integrated business services has further improvement potential. Austria's network of Points of Single Contact would benefit from
better linkage with other business-related e-services. The recent reform of the
trade register system could contribute to a standardization and facilitation of
(online) registration of companies in the central trade register (GISA)
throughout Austria. Still, the access to websites for public e-services for
businesses remains to be improved for users based abroad, inter alia by
increasing the number of procedures for users based abroad. It remains
difficult to set up of interdisciplinary services companies/ consultancies because
of regulatory hurdles (see above) and no action has been taken to tackle this, despite
announcements in the coalition agreement and pronounced demand for integrated
services, especially among start-ups.
The publication rate of public contracts
open to procurement under EU legislation remains low in Austria. In 2013 the value of calls for tenders published by the Austrian
authorities and other organisations under EU procurement legislation was 1.9%
of GDP and 11.82% of total public expenditure on works, goods and services in
2013, well below the EU averages of 3.23% and 19.07%. Publication of public calls
for tenders has consistently been among the lowest in the EU. This cannot be
explained by Austria’s federal structure, as comparisons with other Member
States show. Moreover, in 2013 only 57.2% of contract award notices contained
information about the value of the contracts awarded, a value significantly
lower than the corresponding one in 2011 (67.9%), indicating that the overall
quality and transparency of information provided to bidders is declining.
In the context of the European Semester,
the Council has consistently advised Austria to improve and promote the
competition in services, but policy response has been limited so far. Country-specific recommendations have called for the justification
and proportionality of entry and conduct barriers to service providers to be
reviewed, and/or for such barriers to be removed, to investigate the reasons for
the low publication rate of public procurement contracts and strengthen the
resources of the Federal Competition Authority. The latter is of particular
importance since with its current resources, the Federal Competition Authority
is unable to apply competition law effectively (no forensic IT; no parallel
inspections at multiple locations). Decisive tangible measures
have been largely absent.
 Commitments || Summary assessment([43]) 
 2014 country-specific recommendations (CSRs) 
 CSR 1: Following the correction of the excessive deficit, reinforce the budgetary measures for 2014 in the light of the emerging gap of 0,5 % of GDP based on the Commission services 2014 Spring forecast and after taking into account additional consolidation measures announced by Austria, pointing to a risk of significant deviation relative to the preventive arm of the Stability and Growth Pact requirements. In 2015, significantly strengthen the budgetary strategy to ensure that the medium-term objective is reached and, thereafter, maintained, and ensure that the debt rule is met in order to keep the general government debt ratio on a sustained downward path. Further streamline fiscal relations between layers of government, for example by simplifying the organisational setting and aligning spending and funding responsibilities. || Austria has made limited progress in addressing CSR 1 (this overall assessment of CSR 1 excludes an assessment of compliance with the Stability and Growth Pact). ·       Some progress has been made to reinforce the budgetary measures for 2014. ·       Limited progress on strengthening the budgetary strategy for 2015. ·       No progress on streamlining fiscal relations between layers of government. 
 CSR 2: Improve the long-term sustainability of the pension system, in particular by bringing forward the harmonisation of the statutory retirement age for men and women, by increasing the effective retirement age and by aligning the retirement age to changes in life expectancy. Monitor the implementation of recent reforms restricting access to early retirement. Further improve the cost effectiveness and sustainability of healthcare and long-term care services. || Austria has made some progress in addressing CSR 2. ·       Some progress has been made on increasing the effective retirement age, through recent reforms restricting access to early retirement. However, other measures to make the pension system more sustainable in the long term are lacking. ·       Some progress on improving the cost- effectiveness and sustainability of healthcare and long-term care services by continuing to implement healthcare reform.   
 CSR 3: Reduce the high tax wedge on labour for low-income earners by shifting taxation to sources less detrimental to growth, such as recurrent taxes on immovable property, including by updating the tax base. Reinforce measures to improve labour market prospects of people with a migrant background, women and older workers. This includes further improving childcare and long-term care services and the recognition of migrants' qualifications. Improve educational outcomes in particular for disadvantaged young people including those with a migrant background, by enhancing early childhood education and reducing the negative effects of early tracking. Further improve strategic planning in higher education and enhance measures to reduce dropouts.   || Austria has made limited progress in addressing CSR 3. ·       No progress on reducing the tax wedge on labour, although a forthcoming reform has been announced for next spring. ·       Some progress on older workers' labour market participation. Austria has made some progress, especially on improving measures to make individual older workers more employable. ·       Some progress on improving the labour market prospects of people with a migrant background, through improvements in the recognition progress and efforts to make the Austrian labour market more attractive to highly qualified migrants. ·       Limited progress on increase of labour market prospects of women. ·       Some progress on increasing provision of childcare facilities and long-term care services. ·       Limited progress on further raising the educational achievement of disadvantaged people by improving education and higher education and reducing the negative impact of early tracking. ·       Limited progress on further improving strategic planning in higher education and on cutting the drop-out rate.   
 CSR 4: Remove excessive barriers for services providers, including as regards legal form and shareholding requirements and with respect to setting up interdisciplinary services companies. Review whether restrictions on entry into and conduct in regulated professions are proportionate and justified by general interest. Identify the reasons behind the low value of public contracts open to procurement under EU legislation. Substantially strengthen the resources of the Federal Competition Authority. || Austria has made limited progress in addressing CSR 4. ·       No progress: Austria has not made reform progress over the reporting period, including as regards legal form and shareholding requirements and interdisciplinary service activities. Still no broad review of the existing restrictions. ·       Limited progress: Austria is playing an active part in the mutual evaluation for which the Directive amending the Professional Qualifications Directive provides. However, no major changes can be expected before the evaluation is completed in January 2016. More generally, there seems to be limited political will to implement substantive reforms in this area. ·       No progress: Austria has not yet taken any action to strengthen the resources of the Federal Competition Authority. Owing to budgetary constraints and a lack of political will, no future actions are planned.   
 CSR 5 Continue to closely oversee and advance effectively the orderly restructuring of the nationalised and partly nationalised banks. || Austria has made substantial progress in addressing CSR 5. The bad bank of Hypo Alpe-Adria, Heta Asset Resolution, was formally set up at the beginning of November 2014. The sale of SEE subsidiaries of Hypo Alpe Adria to Advent International and EBRD was finalised on 23 December 2014. As part of its restructuring plan, OEVAG sold its largest subsidiary (Volksbanken Romania) to Banca Transilvania in December 2014. 
   Europe 2020 (national targets and progress) 
 Employment rate target: || Employment rate for working age population 20-64: 75.2% in 2011, 75.6% in 2012, 75.5% in 2013. The Austrian employment must rise further increase to meet the national target of 77-78 % by 2020. 
 R&D target: 3.76% of GDP || 2000 (1.89 %) and 2008 (2.59 %, nearly 0.1 pp increase per year) progress in increasing R&D intensity slowed down after 2008. R&D intensity reached 2.74 % in 2010, 2.81 % in 2012 and 2.81 % in 2013 (of which about 1.6 % from private sources and 1.2 % from public sources, 0.9 % being from the public sector). Estimates by Statistics Austria (May 2014) stated that R&D intensity would fall somewhat in 2014 by comparison with 2013. Both private and public R&D spending has stagnated as a percentage of GDP in recent years. This implies that Austria is currently not on track ro meet its ambitious 3.76 % spending target. Without additional efforts and faster progress, the target cannot be met. 
 -National Greenhouse gas (GHG) emissions target:   -16 % in 2020 compared with 2005 (in sectors not included in the Emissions Trading Scheme).   || Change in greenhouse gas emissions from sectors not included in the Emissions Trading Scheme between 2005 and 2013: -11 %. According to the latest national projections submitted to the Commission in 2013, and taking into account existing measures, it is expected that the target will be missed: -9% in 2020 as compared with 2005 (i.e. a projected shortfall of 7 pp). 
 2020 Renewable energy target: 34%   || Austria continued to make good progress in promoting use of renewable energy. Energy from renewable sources represented 32.6 % of Austria’s energy consumption in 2013 (Eur'Observ'ER), and the country is on track for meeting its 2020 target of 34 %. 
 Energy Efficiency target. AT’s 2020 Energy Efficiency target is 31.5 Mtoe expressed in primary energy consumption (26.3 Mtoe expressed in final energy consumption). || Although primary and final energy consumption in Austria has been decreasing in 2005-2012, Austria is not on track in meeting its national energy efficiency target for final energy consumption. More effort is needed to further decrease AT’s current primary energy consumption (31.8 Mtoe in 2012) and to keep it at this level so as to reach AT’s 2020 target. The adoption of a new energy efficiency law on 9 July 2014, transposing the Energy Efficiency Directive, is a step in this direction.  
 Early school leaving target: || Austria is already outperforming the Europe 2020 and its national target for reducing early school leaving (2006: 9.8 %, 2012: 7.6 %, 2013: 7.3% ), but efforts to reduce the early school leaving rate amongst people with a migrant background must be maintained.   
 Tertiary education target: || Austria is making progress in this area (2006: 21.2 %, 2011: 23.8 %, 2012: 26.3 %, 2013: 27.3 %). If qualifications classified as level 4a in the international standard classification of education are also included, the rate of tertiary education attainment was 38.3 % in 2012. So the national target of 38 % has already been met, but it is significantly lower than the EU target of 40 %. 2014 data still not available. 
 Risk of poverty or social exclusion target: || The number of people at risk of poverty or social exclusion fell by 127 000, reaching 1.572.000 in 2013, compared with the base line year 2008, when the number of people at risk of poverty and social exclusion was 1,699,000. This suggests that Austria will meet more than half the planned target of 235 000 by 2020. However, it should be mentioned that there was a break in series in 2008. 
 Table B.1:       Macroeconomic indicators 
 Notes:                                                                                                                                                                                                          1 The output gap constitutes the gap between the actual and potential gross domestic product at 2010 market prices. 2 The indicator of domestic demand includes stocks.                                                                                                                                                 3 Unemployed persons are all those who were not employed, had actively sought work and were ready to begin working immediately or within two weeks. The labour force is the total number of people employed and unemployed. The unemployment rate covers the age group 15-74.                                                                                                                                                           
 Source: European Commission 2015 winter forecast; Commission calculations. 
 

 Table B.2:       Financial market indicators 
 Notes:                                                                                                                                  1) Latest data November 2014.                                                                                                                            2) Latest data Q2 2014.                                                                                                                                             3) Latest data September 2014.                                                                                                                           4) Latest data June 2014.  Monetary authorities, monetary and financial institutions are not included.                                      * Measured in basis points.                                                                                                                                    
 Source: IMF (financial soundness indicators); European Commission (long-term interest rates); World Bank (gross external debt); ECB (all other indicators). 
 Table B.3:       Taxation indicators 
 (1) Tax revenues are broken down by economic function, i.e. according to whether taxes are raised on consumption, labour or capital. See European Commission (2014), 'Taxation trends in the European Union', for a more detailed explanation.      (2) This category comprises taxes on energy, transport and pollution and resources included in taxes on consumption and capital.      (3) VAT efficiency is measured via the VAT revenue ratio. It is defined as the ratio between the actual VAT revenue collected and the revenue that would be raised if VAT was applied at the standard rate to all final (domestic) consumption expenditures, which is an imperfect measure of the theoretical pure VAT base. A low ratio can indicate a reduction of the tax base due to large exemptions or the application of reduced rates to a wide range of goods and services (‘policy gap’) or a failure to collect all tax due to e.g. fraud (‘collection gap’). It should be noted that the relative scale of cross-border shopping (including trade in financial services) compared to domestic consumption also influences the value of the ratio, notably for smaller economies. For a more detailed discussion, see European Commission (2012), 'Tax Reforms in EU Member States', and OECD (2014), 'Consumption tax trends'. 
 Source: European Commission 
(1)
Unemployed persons are all those who were not employed, but had actively sought
work and were ready to begin working immediately or within two weeks. The
labour force is the total number of people employed and unemployed. Data on the
unemployment rate of 2014 includes the last release by Eurostat in early
February 2015
 Table B.4:       Labour market and social indicators 
 (Continued on the next page) 
 (2)
Long-term unemployed are persons who have been unemployed for at least 12
months. 
Source: European
Commission (EU Labour Force Survey and European National Accounts).                                                                                           
 Table (continued) (1) People at risk of poverty or social exclusion (AROPE): individuals who are at risk of poverty (AROP) and/or suffering from severe material deprivation (SMD) and/or living in households with zero or very low work intensity (LWI).      (2) At-risk-of-poverty rate (AROP): proportion of people with an equivalised disposable income below 60 % of the national equivalised median income.       (3) Proportion of people who experience at least four of the following forms of deprivation: not being able to afford to i) pay their rent or utility bills, ii) keep their home adequately warm, iii) face unexpected expenses, iv) eat meat, fish or a protein equivalent every second day, v) enjoy a week of holiday away from home once a year, vi) have a car, vii) have a washing machine, viii) have a colour TV, or ix) have a telephone.      (4) People living in households with very low work intensity: proportion of people aged 0-59 living in households where the adults (excluding dependent children) worked less than 20 % of their total work-time potential in the previous 12 months.      (5) For EE, CY, MT, SI and SK, thresholds in nominal values in euros; harmonised index of consumer prices (HICP) = 100 in 2006 (2007 survey refers to 2006 incomes).     (6) 2014 data refer to the average of the first three quarters. 
 Source: European Commission (EU Labour Force Survey and European National Accounts) For expenditure for social protection benefits ESSPROS; for social inclusion EU-SILC. 
 Table B.5:       Product market performance and policy indicators 
 Source: European Commission; World Bank — Doing Business (for enforcing contracts and time to start a business); OECD (for the product market regulation indicators) 
 Table B.6:       Green Growth 
 Country-specific notes:         2013 is not included in the table due to lack of data.        General explanation of the table items:        All macro intensity indicators are expressed as a ratio of a physical quantity to GDP (in 2000 prices)                  Energy intensity: gross inland energy consumption (in kgoe) divided by GDP (in EUR)                  Carbon intensity: Greenhouse gas emissions (in kg CO2 equivalents) divided by GDP (in EUR)                  Resource intensity: Domestic material consumption (in kg) divided by GDP (in EUR)                  Waste intensity: waste (in kg) divided by GDP (in EUR)        Energy balance of trade: the balance of energy exports and imports, expressed as % of GDP          Energy weight in HICP: the proportion of "energy" items in the consumption basket used for the construction of the HICP        Difference between energy price change and inflation: energy component of HICP, and total HICP inflation (annual % change)        Environmental taxes over labour or total taxes: from DG TAXUD’s database ‘Taxation trends in the European Union’        Industry energy intensity: final energy consumption of industry (in kgoe) divided by gross value added of industry (in 2005 EUR)         Share of energy-intensive industries in the economy: share of gross value added of the energy-intensive industries in GDP        Electricity and gas prices for medium-sized industrial users: consumption band 500–2000MWh and 10000–100000 GJ; figures excl. VAT.        Recycling rate of municipal waste: ratio of recycled municipal waste to total municipal waste        Public R&D for energy or for the environment: government spending on R&D (GBAORD) for these categories as % of GDP        "Proportion of GHG emissions covered by ETS: based on greenhouse gas emissions (excl LULUCF) as reported by Member States to the European Environment Agency "        Transport energy intensity: final energy consumption of transport activity (kgoe) divided by transport industry gross value added (in 2005 EUR)        Transport carbon intensity: greenhouse gas emissions in transport activity divided by gross value added of the transport sector        Energy import dependency: net energy imports divided by gross inland energy consumption incl. consumption of international bunker fuels        Diversification of oil import sources: Herfindahl index (HHI), calculated as the sum of the squared market shares of countries of origin        Diversification of the energy mix: Herfindahl index over natural gas, total petrol products, nuclear heat, renewable energies and solid fuels        Renewable energy share of energy mix: %-share of gross inland energy consumption, expressed in tonne oil equivalents * European Commission and European Environment Agency    ** For 2007 average of S1 & S2 for DE, HR, LU, NL, FI, SE & UK. Other countries only have S2.    *** For 2007 average of S1 & S2 for HR, IT, NL, FI, SE & UK. Other countries only have S2. 
 Source: European Commission unless indicated otherwise; European Commission elaborations indicated below 
([1])  The S2 indicator shows the immediate
and permanent adjustment required to ensure that the deb-to-GDP ratio is not on
an ever-increasing path
([2])  Data on capitalisation as of 2014 are
based on the Basel III requirements introduced through CRD IV/CRR.
([3])  The Ministry of Labour, Social Affairs
and Consumer Protection negotiated an agreement with the banks, and the
Austrian Chamber of Commerce to reverse the financial losses to consumers which
arose in a limited number of cases due to the triggering of
"stop-loss" clauses in loan contracts.
([4])  The Austrian banks included in the ECB
comprehensive assessment are: BAWAG P.S.K, Erste Group, Raiffeisenlandesbank
Oberösterreich, Raiffeisenlandesbank Niederösterreich-Wien, Raiffeisen
Zentralbank Österreich and Österreichische Volksbanken AG.
([5])  OECD (2014): Taxing wages. 
([6])  The low-wage trap is defined as the
share of additional earnings arising from an increase in work
productivity/working hours which are wiped out by the relative increase in
taxes and withdrawn of benefits. The low-wage trap is particularly high in
Austria for principal earners at 100% of average wage and second-earners moving
from 33% to 67% of average wage.
([7])  Subnational own taxes are defined as
taxes which subnational government have the power to introduce, or
alternatively modify the tax rate and/or the tax base.
([8])  As women are more likely to take breaks
in their careers due to care, and also have shorter working lives than men,
their pension levels could have been negatively impacted.
([9])  Between 2003 and 2011 an annual decline
rate of 1.1% was observed for Austria, compared to 1.8% on average in EU Member
States.
([10])https://www.bmask.gv.at/site/Startseite/News/Hundstorfer_Pensionsantrittsalter_2014_um_13_Monate_gestiegen_Pensionsreformen_wirken.
([11]) )In particular this would concern the principles of “Providing patient care at the right time, in
the right place, and with optimal medical and nursing quality." and  "Accelerating
the establishment of multi-professional and integrated forms of care at all
levels."
 http://www.bmg.gv.at/home/EN/Topics/Health_reform)
([12]) For more information see "Joint
Report on Health System" by  European Commission and Economic Policy Committee.
http://ec.europa.eu/economy_finance/publications/occasional_paper/2010/pdf/ocp74_fiches_en.pdf 

([13]) E.g. only a fraction of diabetes
patients in Austria (8.9% of the population) could be covered, possibly
avoiding hospital admissions for uncontrolled diabetes, which are particularly
elevated in Austria, also when correcting for prevalence. http://ec.europa.eu/health/reports/docs/health_glance_2012_en.pdf.

([14]) ECFIN AMECO database.
([15]) In 2013, the male employment rate for
55-64-year-olds was 54.3% (3.2% below the EU average), while the employment
rate for women of the same age range was 36.0% (7.3% below the EU average).
([16]) In 2010, there were about 9 thousand
elderly unemployed aged 55 – 64 years old, while in 2012 close to 14 thousand
and in 2013 over 16 thousand. In 2013, 7.6% of all unemployed (aged 15-64) were
elderly unemployed. 
([17]) LFS 2012 ad hoc module:
"Transition from work to retirement".
([18]) The employment rate for men in the age
bracket 55-59 should increase from 68.1% 2012 to 74.6% 2018, the employment
rate for men in the age bracket 60-64 should increase from 21.6% in 2012 to
35.3% in 2018 and the employment rate for women in the age bracket 55-59,
should increase from 47.9% in 2012 to 62.9% in 2018. 
([19]) Based on SILC 2012 data, the employment
rate for persons with disabilities in the age group 20-64 was 49.6% (EU: 47.9%).
This represents a gap of 24.8 percentage points compared with the employment
rate for persons without disabilities (74.4%). EU-SILC is based on different
methodology than the Labour Force Survey, it refers to self-reported
employment/unemployment, etc. and thus these two surveys are not comparable.
([20]) OECD projections show that if the
full-time equivalent rate of women reached the 2010 full-time equivalent rate
of men by 2030, then the total labour force would increase by 17.4% over the
period 2011 to 2030. (OECD (2012), 'Closing the Gender Gap').
([21]) A large percentage (38.7%) of the women
working part-time in Austria 2013 highlighted care responsibilities for
children or elderly people as one of the main reasons for working part-time.
This compares to only 3.8% of men in the same circumstances.
([22]) The share of children in the respective
age group for whom a place in a childcare facility has been secured. 
([23]) This includes first-generation immigrants
and children of immigrants. In Austria, about ¾ of people with a migrant
background are first generation migrants, while 1/4 is second generation
migrants, with the share of second generation slowly increasing in the total.
(Statistik Austria).
([24]) In 2013, out of the 1.6 million people
with a migrant background, 566 thousand came from another EU country, 533
thousand from parts of the former Yugoslavia that are outside the EU, and 522
thousand from other non-EU countries. (Statistics Austria) 329 thousand people
of working age (15-64 years old), were non-EU nationals (Eurostat, Labour Force
Survey).
([25]) Eurostat, Labour Force Survey 2013.
([26]) Their employment rate (43.9%) and
unemployment rate (17.9%) compared to: respectively 63.9% and 10.5% for 20-64
year olds born outside EU28 and 55.1% and 8.4% for 15 -24 year olds born in
Austria. 
([27]) Since summer 2013 so called
"Welcome Desks" have been established. In the first year of work
around 25 500 consultations were held.
([28]) 19.5% compared with an EU average of
17.8%. In mathematics and science, the share of low achievers is lower than the
EU average (18.7 and 15.8% in Austria compared with an EU average of 22.1% and
16.6%). 
([29]) OECD PISA 2012.
([30]) OECD PISA 2012.
([31]) See European Commission, Education and
Training Monitor 2014, p. 27, and Fessler/Mooslechner/Schürz (2012):
Intergenerational transmission of education attainment in Austria, in Empirica
39: 65-86.
([32]) Austria has the third highest rate in
the EU of children aged 0-5 with foreign citizenship (14.7%) and the share of
school-age students with a migrant background is expected to rise from the
current figure of about 22% to 30% by 2030. Source: Key Data on Early Childhood
Education and Care in Europe (2014), Eurydice and Eurostat Report.
([33]) Rates also vary between regions from
5.5 % in Lower Austria to 11.4 % in Vienna.
([34]) European Commission Education and
Training Monitor 2014, Volume 2: Country analysis, Austria, (http://ec.europa.eu/education/tools/et-monitor_en.htm#country-reports).
([35]) Source: OECD. Education at a Glance
2013, table A4.1. A recent study attributes the high figure to double counting
and adding in exchange students. However, as these statistical problems also
exist in other EU countries, comparison with the lower figures of other EU or
neighbouring countries show that dropping out is a challenge in Austria. See Thaler, Bianca/Unger Martin (2014)/ Dropouts ≠ Dropouts. Wege nach dem Abgang von der
Universität, Studie im Auftrag der Österreichischen Universitätenkonferenz,
Wien.
([36]) IHS/WIFO Studie zum künftigen Qualifikationsangebot und –bedarf in
Österreich im Auftrag der Arbeiterkammer Wien, April 2013.
([37]) EU average: 22.8 % (2012).
([38]) ET 2020 National Report Austria
2014, http://www.hochschulplan.at.
([39]) Bericht des Rechnungshofs: Studienvoranmeldung sowie Studien und
Orientierungsphase (8/2013), Österreichischer Wissenschaftsrat: Zur
Studieneingangs- und Orientierungsphase (StEOP) an Österreichs Universitäten. Stellungnahme und Empfehlungen. Wien, November 2014.
([40]) “Infrastructure in the EU: developments
and impacts on growth”, ECFIN Occasional Paper 203/December 2014
([41]) Source: OECD. 
([42]) See E.Canton, D.Ciriaci, I.Solera
(2014): “The Economic Impact of Professional Services Liberalisation”. European
Economy, Economic papers 533.
([43]) The following categories are used to
assess progress in implementing the 2014 CSRs of the Council Recommendation: No
progress: The Member State has neither announced nor adopted any measures
to address the CSR. This category also applies if a Member State has
commissioned a study group to evaluate possible measures. Limited progress:
The Member State has announced some measures to address the CSR, but these
measures appear insufficient and/or their adoption/implementation is at risk. Some
progress: The Member State has announced or adopted measures to address the
CSR. These measures are promising, but not all of them have been implemented
yet and implementation is not certain in all cases. Substantial progress:
The Member State has adopted measures, most of which have been implemented.
These measures go a long way towards addressing the CSR. Fully addressed:
The Member State has adopted and implemented measures that address the CSR
appropriately.